The link between Venezuela and Cuba

The link between Venezuela and Cuba
By Keith Johnson
Foreign Policy
US lawmakers increase pressure on Obama to take tougher line on Caracas

WASHINGTON — Top US lawmakers from both parties are urging the Obama
administration to take a tougher line on Venezuela, which is violently
cracking down on popular protests against the government of Nicolás
Maduro. For some on Capitol Hill, though, the real target is Cuba.
These leading Republicans and Democrats are pushing back at a country
that has been a constant thorn in the side of US interests in Latin
America in recent years.
Representatives Ileana Ros-Lehtinen, Republican for Florida, and Eliot
Engel, Democrat for New York, have both called for the Organization of
American States, which meets this week, to take a tougher line on the
Maduro government’s treatment of peaceful protesters.
Senator Marco Rubio, Republican for Florida, has floated the idea of US
sanctions against Venezuelan officials involved in the crackdown, and
even against the Venezuelan government itself.
But Venezuela hawks such as Rubio are making a second argument: tougher
action against Venezuela represents a chance to undermine one of the key
lifelines of the communist regime in Cuba, whose economy relies on
heavily subsidized oil and other gifts from Caracas.
“The Cubans get free and cheap oil from the Venezuelans. So their
interest is keeping this regime in place because they’re their
benefactors,” Rubio told CNN this week. “And Cuba is clearly involved in
assisting the Venezuelan government with both personnel and training and
equipment to carry out these repressive activities,” he added.
A host of key lawmakers have long been sceptical of the Obama
administration’s efforts to reach out to Cuba after more than 50 years
of a US economic embargo against the island nation. Obama’s efforts to
loosen restrictions on travel and remittances, especially for US
citizens of Cuban descent, have provoked a backlash among lawmakers,
like Rubio, who count on their votes.
That perception was strengthened in December, when President Obama shook
hands with Raúl Castro, the brother of Fidel and the current Cuban
president, at the funeral of Nelson Mandela. That came just a month
after Obama suggested the United States might need to rethink the embargo.
Rubio said in a passionate speech on the Senate floor Monday that he
also wants normal relations with Cuba — “a democratic and free Cuba. But
you want us to reach out and develop friendly relationships with a
serial violator of human rights, who supports what’s going on in
Venezuela and every other atrocity on the planet?”
Cuba and Venezuela are linked as foreign policy challenges for many
lawmakers because of the close ties between the two socialist regimes.
Former Venezuelan strongman Hugo Chávez was an unabashed supporter of
Fidel Castro, and helped ensure that Venezuela used its oil wealth to
help prop up Cuba’s ailing economy. Chávez repeatedly sought medical
treatment for the cancer that eventually killed him in Cuba, and the
close relationship between the two countries has continued even as both
have moved on to other leaders. Nicolás Maduro was one of the feted
guests last summer when Cuba celebrated the 60th anniversary of the
start of the Cuban revolution.
‘Bolivarian revolution’
While Venezuela’s self-proclaimed “Bolivarian revolution” was modelled
on Cuba’s, the South American oil giant replaced the Soviet Union as the
island country’s main economic patron, underwriting the Cuban economy to
the tune of billions of dollars a year.
Some estimates of the scale of Venezuelan support for Cuba, including
more than 130,000 barrels a day of oil but also salaries for thousands
of Cuban officials working in the country, suggest Caracas gives Cuba
more than US$10 billion a year, or between one-fifth and one-sixth of
Cuba’s gross domestic product. That comes close to the level of economic
support that Cuba received from the Soviet Union in the late 1980s,
before the Soviet collapse abruptly ended Moscow’s economic aid to Fidel
Castro.
In other words, some lawmakers believe, further unrest or even a change
in the regime in Venezuela could represent a direct threat to the
continued rule of Raúl and Fidel Castro in Cuba.
However, a lot has changed since the end of the Cold War. Cuba has
slowly tried to reform its economy and find more than one “sugar daddy”
to prop it up. Brazil, for one, is increasing investment and trade in
Cuba, and just helped construct a major port not far from Havana. Cuba,
recognizing the peril that reliance on Venezuelan oil poses for its
economy, has also repeatedly sought to tap what it believes are abundant
oil reserves in the Gulf of Mexico, but so far without success.
“Do you drive Cuba off the edge of the earth by strangling Venezuela?
Nothing the United States has done in 50 years has caused that to happen
in Cuba,” Julia Sweig, a Latin American expert at the Council on Foreign
Relations, told Foreign Policy. “My expectation is that Cuba has been
planning for this for a long time, and even if they’re not 100 percent
ready, they are prepared enough,” including deeper economic ties with
Brazil, the European Union, Canada, and China, she said.Oil is at the
heart of Venezuela’s support for Cuba, but it is also at the heart of
Venezuela’s own woes. Much of the popular anger in Venezuela is a
reaction to the government crackdown on students. However, widespread
dissatisfaction with the Maduro government’s economic mismanagement has
prompted even the middle class — hammered by soaring inflation, empty
store shelves and a cratering currency — to join the protests. The New
York Times captured the mood this week talking with one such protester:
“Look. I’ve got a stone in my hand and I’m the distributor for Adidas
eyewear in Venezuela,” Carlos Álvarez told the newspaper.
Economic malaise
And that economic malaise is due in part to the systemic mismanagement
of Venezuela’s oil wealth over the past 15 years. Blessed with the
largest oil reserves in Latin America, and the second largest in the
world, Venezuela has struggled to attract the foreign investment needed
to increase oil production, especially in challenging oil fields laden
with thick, heavy oil.
Production has remained constant, at about 2.3 million barrels per day
in recent years, in part because rampant inflation has made it hard for
foreign firms to boost output there and partly because the Chávez and
Maduro regimes have used oil income to underwrite expensive social
programmes at home, to the detriment of productive investment in the
industry.
Exports have plummeted
Exports, which account for about half the Venezuelan budget, have
plummeted since the advent of Chavismo. Venezuelan oil exports peaked in
the late 1990s at about three million barrels, but have since fallen to
about 1.7 million barrels a day. Additionally, some 400,000 barrels of
that export total are sent to Caribbean nations under preferential
terms, further eroding Caracas’ potential earnings.
While Rubio and others rail at the State Department for not taking a
tougher stance on Venezuela, another office in Foggy Bottom did take one
important step this week that could ultimately deal a big economic blow
to Maduro and the Venezuelan government. The State Department’s
Inspector General determined that its environmental review of the
controversial Keystone XL pipeline suffered no conflict of interest.
That removes one of the last potential obstacles for the Obama
administration to finally greenlight the pipeline that would carry
almost 800,000 barrels a day of heavy crude oil from Canada to
refineries on the US Gulf Coast.
The biggest loser if Keystone is built? Venezuela, which currently
exports about 800,000 barrels of heavy oil a day to the United States to
keep those refineries humming.

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